Should You Transfer Your Home Loan?

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Should You Transfer Your Home Loan?

Home loan balance transfer, also called refinancing a home loan, is a process where a housing loan is paid off with another loan. People generally transfer the balance of a loan in order to attain lower rates of interest. In case a bank or other financial institutions are unwilling to reduce the interest rates on a particular loan, it can always be refinanced with a help of another bank.

Home Loan Balance Transfer

How to Transfer a Home Loan Balance

In order to Transfer a Home Loan Balance follow the steps mentioned below.

• Request your current lender for the documents required to refinance the loan.
• After the lender provides you with a consenting letter with the outstanding loan amount, these documents will have to be provided to the new lender you wish to refinance your loan with.
• The new lender will then transfer the outstanding amount to the old lender.
• The old loan account will now be closed, and all future payments will go towards the loan you have availed with the new lender.
• The old lender will then hand over all the property documents to the new lender, officially completing the refinancing process.

Top 6 Reasons to Transfer Your Home Loan Balance

• Refinancing your loan may lower you Equated Monthly Instalments (EMI) in some cases.
• As mentioned earlier, the rate of interest payable towards the loan reduces.
• Transferring your home loan balance will increase your credit score as well.
• While refinancing your housing loan, you can negotiate for a shorter tenure with the new lender.
• Often times, while looking out for a new bank to refinance your loan, you can opt for a bank that provides better service than your existing bank.
• Refinancing your home loan in the age of technology has become hassle free. The documentation required is minimal and more often than not, it is a quick procedure.

4 Things to Keep in Mind Before Transferring Your Loan

Although the process of refinancing you housing loan is a simple process in this day and age, one must be mindful about the process. An impetuous move to transfer the loan may cause more harm than good. Keep the following points in mind before transferring your home loan balance.

• Credibility — It is important that the new potential lender is credible in lending out money and the reduced interest rate offered is not just a promotional gimmick.
• Consider all costs — Sometimes it can be easy to neglect costs that are associated with refinancing a housing loan. At the end of the day, you are transferring the housing loan balance to save money. If the costs like stamp paper, documentation charges, processing fee, etc. outweigh the savings you receive, it becomes illogical to refinance your loan.
• Quality of service — Sometimes, the service provided by a particular ban can overshadow the marginal savings received by refinancing your mortgage. It is important to do your research on the quality of customer support that a particular lender provides.
• Go through the fine print — A lowered rate of interest should not cause an inconvenience to you in future. Reading the fine print of the agreement from the new lender and the existing lender as well will give you all the information required to base your decision on whether or not to refinance your home loan.

Should You Transfer the Balance on Your Housing Loan or Simply Reset it?

Transferring the balance from your home loan, although beneficial, is time consuming and has a lot of procedure associated with it. Not to mention that you will be breaking off a relationship with a bank that may have served you well. Resetting your balance with the same bank, on the other hand, is a simpler process. Not many people do this because they are oblivious to the fact that one can simply rest the interest rate of a loan by simply writing to the bank. This is an easier process to follow in order to reduce the interest rate on a housing loan.

Therefore, the first choice should always be to rest the interest rate on a loan. In case the bank declines this request, you can always opt for refinancing afterwards.

Difference Between Home Loan and Home Loan Balance Transfer

Home Loan — A home loan is a loan availed from a bank or other financial institutions in order to purchase a house, land, construct a property or simply to renovate an existing property. A lot of documentation and verification is required to avail a home loan. It also is considerably harder to get a housing loan application approved.

Home Loan Balance Transfer — This is when you transfer an existing home loan from one bank to another. Also known as refinancing, this also helps an applicant avail lower interest rates and better services. There is lesser documentation involved in home loan balance transfer and it easier to attain when compared to a home loan.